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Sales
of new single-family houses in July 2016 were at a seasonally adjusted annual
rate (SAAR) of 654,000 units -- well above expectations
of 580,000. This was 12.4 percent (±12.7%)* above the revised June rate of
582,000 (originally 592,000 units) and 31.3 percent (±19.9%) above the July
2015 SAAR of 498,000; the not-seasonally adjusted year-over-year comparison
(shown in the table above) was +32.6%. For a longer-term perspective, July’s
sales were 53% below the “bubble” peak and 9% above the long-term, pre-2000
average.
Because
single-family starts were essentially flat in July while sales increased, the
three-month average ratio of starts to sales dropped to 1.26 -- below above the
average (1.41) since January 1995.
The
median sales price of new houses sold in July 2016 fell by $15,900 to $294,600;
the average sales price was $355,800 (+$2,300). Starter homes (those priced
below $200,000) made up 17.5% of the total sold in July, the lowest proportion
on record for that calendar month (going back to 2002); prior to the Great
Recession starter homes comprised as much as 61% of total sales.
* 90% confidence interval includes zero.
The Census Bureau does not have sufficient statistical evidence to conclude that
the actual change is different from zero.
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As
mentioned in our post
about housing permits, starts and completions in July, single-unit completions declined
by 3,000 units (-0.4%). Because completions decreased while sales rose,
new-home inventory shrank in both absolute (-7,000 units) and months of inventory
(-0.6 month) terms.
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Existing home sales
plummeted by 180,000 units (-3.2%) in July to 5.39 million units (SAAR), below expectations
of 5.52 million. Inventory of existing homes expanded in both absolute (+20,000
units) and months-of-inventory (+0.2 month) terms. Because new-home sales jumped
while existing-home sales decreased, the share of total sales comprised of new
homes rose to 10.8% -- breaking through 10% for the first time in nearly eight
years. The median price of previously owned homes sold in July retreated by $3,500
(-1.4%), to $244,100.
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Housing
affordability deteriorated as the median price of existing homes for
sale in June increased by another $9,500 (+4.0%; +5.0 YoY) to a new record
$249,800. Concurrently, Standard
& Poor’s reported that the U.S. National Index in the S&P CoreLogic
Case-Shiller Home Price indices posted a not-seasonally adjusted monthly change
of +1.0% (+5.1% YoY).
“Home prices continued to rise across the
country led by the west and the south,” said David
Blitzer, Managing Director and Chairman of the Index Committee at S&P
Dow Jones Indices. “In the strongest region, the Pacific Northwest, prices are
rising at more than 10%; in the slower Northeast, prices are climbing a bit
faster than inflation. Nationally, home prices have risen at a consistent 4.8%
annual pace over the last two years without showing any signs of slowing.
“Overall,
residential real estate and housing is in good shape. Sales of existing homes
are at running at about 5.5 million units annually with inventory levels under
five months, indicating a fairly tight market. Sales of new single family homes
were at a 654,000 seasonally adjusted annual rate in July, the highest rate
since November 2007. Housing starts in July topped an annual rate of 1.2
million units. While the real estate sector and consumer spending are
contributing to economic growth, business capital spending continues to show weakness.”
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The foregoing comments represent the
general economic views and analysis of Delphi
Advisors, and are provided solely for the purpose of information, instruction
and discourse. They do not constitute a solicitation or recommendation
regarding any investment.
